07SANSALVADOR1168

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DE RUEHSN #1168 1641632

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0 131632Z JUN 07

FM AMEMBASSY SAN SALVADOR

TO RUEHC/SECSTATE WASHDC IMMEDIATE 6669

INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY

RUEHBO/ AMEMBASSY BOGOTA PRIORITY 2496

RUEHBR/ AMEMBASSY BRASILIA PRIORITY 0138

RUEHWN/AMEMBASSY BRIDGETOWN PRIORITY 0535

RUE HPU/ AMEMBASSY PORT AU PRINCE PRIORITY 0253

RUEHDG/ AMEMBASSY SANTO DOMINGO PRIORITY 0724

RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS SAN SALVADOR 001168

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A

TAGS: ECON ENRG SENV EAGR PREL EAID ES

SUBJECT: EL SALVADOR AND U.S.- BRAZIL BIOFUELS INITIATIVE
REF: STATE 73635

IQ. (SBU) Summary. Economic Counselor and Brazilian
Ambassador to El Salvador delivered June 1 the reftel talking
points to Minister of Economy Yolanda de Gavidia. The GOES
has formed a small committee on ethanol production and
alternative fuels, composed of representatives from the
Ministries of Economy, Agriculture and Environment and
President Saca's staff. The GOES is eager to participate in
the initiative, but wants to be clear what is involved and
does not want to have the issue politicized. Minister de
Gavidia would like to meet with USG and Brazilian Government
authorities as soon as possible to discuss El Salvador's
participation in more detail. She also said that she would
provide more information about El Salvador's activities,
plans and concerns on the issue, but the person she said
would be the point of contact quit the Ministry of Economy
later that day. In his June 1 speech to the nation marking
his third anniversary in office, President Saca also said he
would present a law to encourage investment in and
development of renewable energy resources. End Summary.

12. (U) On June 1, Economic Counselor and Brazilian Ambassador
to El Salvador Eduardo Prisco delivered the reftel talking
points to Minister of Economy (MINEC) Yolanda de Gavidia and
the person in charge of Hydrocarbon Affairs at MINEC Gina
Navas de Hernandez. The Minister wanted to know more about
the initiative, including whether it involved developing
ethanol for export to the USA. The Brazilian Ambassador and
Econ Counselor explained that the purpose of the initiative
was to create alternative energy resources for domestic
consumption, not export to the USA. De Gavidia said she was
eager to sit down with the parties (USG, Brazil, and perhaps
the IDB) as soon as possible to talk in more detail about
next steps.

T_3 . (SBU) De Gavidia said alternative energy production was a
complex undertaking involving many issues, including, fuel
and food prices, environment, agricultural and potentially
political impacts. She did not want the issue to be
politicized as a USA versus Venezuelan issue. She talked
about a potential price stabilization fund and said Colombia
had adopted one as part of its overall alternative energy
strategy. De Gavidia said she would soon travel to Colombia
to learn more about the Colombian's approach. The Brazilian
Ambassador said Brazil had a price stabilization fund, but
had discontinued it.

f4 . (U) The GOES has been working closely with the

InterAmerican Development Bank (IDB) and Navas said an IDB
consultant would soon be coming to El Salvador to discuss
possible financing options. De Gavidia also emphasized that
whatever discussions that were held with sugar refineries
about potential ethanol production should also include the
sugar cane growers, who feel they have not been well enough
informed on the initiative. She agreed to provide additional
information regarding El Salvador's activities, plans and
concerns regarding alternative fuel development. De Gavidia
said that a small committee of representatives from the
Ministries of Economy, Agriculture and Environment and from
the Secretario Tecnico (President Saca's staff) had been
formed to coordinate the issue for the GOES. She added that
Gina Navas de Hernandez would be the GOES point of contact.

We learned on June 6 that Navas resigned her position at
MINEC within the last few days. The Deputy to Navas,

Francisco Cruz, is now in charge of hydrocarbon issues at the
Ministry of Economy and will be the point of contact for the
initiative. His email address is f cruz@minec . gob . sv. He can
be reached by telephone at 503-2231-5875.

1[5 . (U) President Saca addressed the nation on June 1 marking
his third anniversary in office. In that address, he said he
would propose a law that would provide fiscal incentives for
alternative energy development. Post will provide more
information on that proposal as details become available.
Glazer